Question

A company with 10,000 shares of nominal value Rs 100 declares an annual dividend of 8% to the shareholders

1. Calculate the total amount of dividend paid by the company.
2. Ramesh had bought 90 shares of the company at Rs 150 per share. Calculate the dividend he receives and the percentage of return on his investment.

Answer 1

1) Nominal value of 1 share = Rs 100

Nominal value of 10,000 shares = Rs 100 × 10,000 = Rs 10,00,000

Dividend % = 8%

Dividend = 8% of Rs 10,00,000

`= 8/100 xx 10,00,000 = "Rs"  80,000`

2) Market value of 90 shares = Rs 150 × 90 = Rs 13,500

Nominal value of 90 shares = Rs 100 × 90 = Rs 9,000

Dividend = 8% of Rs 9,000

`= 8/100 xx 9000 = "Rs"  720`

Return % = `"Income"/"Investment" xx 100%`

`= 720/13,500 xx 100%`

`= 5 1/3 %`